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Petitioner furnished his own supplies at both the Red Lion
and SeaTac Airport. Petitioner obtained most of his supplies
from MacPherson Leather Co. (MacPherson Leather), which was
located in Seattle. On occasion, petitioner purchased supplies
from stores such as K-Mart and Safeway. Petitioner did not
maintain complete records of all of the supplies that he
purchased. Petitioner did, however, maintain some records of the
supplies that he purchased from MacPherson Leather.
Petitioner paid business expenses both in cash and by check.
Petitioner's rent under the Port lease was paid by check "so we
have a record of what we pay to the Port." Of the eight receipts
for supplies from MacPherson Leather that are included in the
trial record, three definitively disclose payment by check (in
the amounts of $20.90, $19.36, and $28.50).
During 1993, an individual by the name of Willie Hughes (Mr.
Hughes) performed various services for petitioner. These
services included accounting and tax preparation services. Mr.
Hughes also assisted petitioner in obtaining the Port lease.
Petitioner paid Mr. Hughes for these services.
On his Schedule C for 1993, petitioner claimed a net loss in
the amount of $5,111. In this regard, petitioner reported gross
receipts in the amount of $11,700 and claimed expenses in the
amount of $16,811.
In the notice of deficiency, respondent disallowed the
following expenses claimed by petitioner on his Schedule C:
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